UK Bookies React To New 20% Slots TaxMarch 22, 2012 5:40 pm
The UK’s gambling industry got dealt a “definite blow” this week, after the British Government announced the introduction of a 20% Machine Games Duty (MGD) to replace the current 17% Amusement Machine Licence Duty and VAT.
The new tax hike on slot machines will take effect from February next year, amid fears from the industry that 11,000 jobs are likely to be lost, while other gaming officials were predicting that “the end for many amusement arcades is nigh.”
Commenting on the levy, Simon Davies from Collins Stewart said: “The Budget has demonstrated the vulnerability of so-called ‘sin’ industries at a time when governments are under pressure to grow tax revenues.”
The UK government already receives around £1bn in tax revenue from bookmakers each year, but the increased duty will now impact the profits of companies like William Hill, which is expecting an £11 million drop in profits, and Ladbrokes which can expect a £14 million decrease.
The leisure industry is also likely to face a significant tax hit of an extra £14 million a year, with the CE of the British Beer and Pub Association Brigid Simmonds, reacting to the news by forecasting serious damage to the pub sector. As she explains:
“Fruit machines and quiz machines are an important part of the fabric of British pubs, but this punitive tax could see many of them disappear.”
A further concern for the gaming industry is the Government’s announcement that in 2013 or 2014, telephone and online betting will have its 15% levy charged according to where a gambler places a wager rather than where the bookmaker is located. This is viewed as a means of dealing with the tendency of online operations to move offshore, with the UK chancellor George Osborne stating:
“90 percent of online gambling consumed by our citizens is now supplied from outside the UK. This is clearly not fair and not a sensible way to support jobs in Britain.”